According to a recent survey published on Bloomberg, Bitcoin (BTC) has emerged as a more popular safe haven asset compared to traditional currencies such as the US dollar, the yen, or the Swiss franc.
The survey of investors highlights the growing preference for cryptocurrencies as a means of protection amid mounting concerns over the risk of a US debt default.
Gold Remains Top Choice for Investors
The survey conducted by Bloomberg’s Markets Live Pulse reveals that gold is the preferred choice for investors seeking protection in the event of a US government default. Over half of the surveyed finance professionals indicated that they would invest in gold if the US fails to honor its obligations.
With the risk of a US debt default looming, investors turn to the precious metal as a traditional hedge against economic uncertainty.
The survey findings also highlight the scarcity of alternative safe-haven assets in the face of a potential US debt default. The second most popular asset choice among the 637 respondents was US Treasuries, despite the irony that these would likely be the very instruments affected by a default.
Traditional haven currencies such as the Japanese yen and the Swiss franc were less favored compared to the US dollar. Notably, Bitcoin (BTC) garnered significant attention as some investors view it as a digital equivalent of gold.
While concerns over the debt ceiling impasse continue to mount, the stock market showed resilience and gained momentum in early Monday trading. Investors expressed hopes for a breakthrough as President Joe Biden and House Speaker Kevin McCarthy prepared for a meeting to discuss the issue. Despite warnings from political and financial leaders about the potential consequences of failing to resolve the debt ceiling impasse, market sentiment remains cautiously optimistic.
Split Opinions on Treasury Bonds in Case of Default
Market professionals hold diverging views on the potential impact of a US government default on Treasury bonds. While a majority of investors expect 10-year Treasuries to rally if the debt ceiling issue is resolved without a default, around 60% of retail investors anticipate weakening in the case of a default. The yield on the benchmark US note ended the previous week at 3.46%, indicating market concerns surrounding the debt crisis.
The impasse over the debt ceiling has led to distortions in the market, particularly in the yields of short-dated securities at risk of delayed payment. Rates have risen significantly, particularly since early June, when Treasury Secretary Janet Yellen warned of a potential exhaustion of borrowing capacity.
